Describe the LED activity at power up. Does the LED blink or is it on steady? What happens when you press the reset button? Does it blink three times? If it does, there’s likely a bootloader present.
i have since found this thread which seems to be exactly my situation;
Lilypad 16MHz: Supposed to run fast? - IDE 1.x - Arduino Forum
So now your Lilypad runs at 2X speed? I thought you couldn’t load anything.